Tax evasion and tax cheating are considered serious crimes in Canada. If you get caught with false information on your tax return which has been clearly fabricated intentionally then you will be forced to pay hefty fines and depending on how severe the fabrication was you can easily have to do jail time as well.
Does this mean that tax planning is illegal as well? Of course not. Tax planning is basically when you sit with a chartered accountant and plan the best ways you can handle your assets in order to minimize your taxes legally. The most important factor with regard to tax planning is that your small business tax accountant is well versed in the laws and regulations of the Canadian government and will only give you advice based on the Income Tax Act and what is legal in Canada.
If you are really looking for a way to reduce your taxes you don’t have to sink to making up information. Instead, you can easily get your taxes planned with a professional and save yourself from the legal consequences. According to the CRA, there are three major kinds of tax evasion or tax cheating that you could be penalized for.
1. Assets Abroad
The CRA mandates that you report your assets even if they are abroad. If you have land, a house, or money back home you need to include that in your tax return when you file it. If the CRA gets suspicious and digs into your case they can figure out you haven’t been reporting these assets and the consequences can be heavy on your pockets.
If you are caught protesting against taxes and promoting others to not pay their taxes as well you can easily be taken in by the law. You are not allowed to encourage other individuals to shirk on their taxes, and if you are caught doing so you will definitely have to pay the consequences.
3. Illegal Tax Plans
Some financial professionals pretend they are following the law but they give illegal tax information instead. You need to make sure the firm you are working with has good and honest accountants before you start taking their advice for tax planning.
If the CRA ever finds out that you have assets abroad and you have not reported them, if they find out that you have been protesting against taxes, and if they find out that you have been following illegal tax plans then they will more then likely penalize you with hefty fines and you may even be forced to undergo jail time as well.
The only way that you can ensure you are not getting on the wrong side of the CRA is to be honest with your taxes and only get tax deductions based on what is legal and acceptable. The law has a lot of room-especially for businesses- to cut down on their taxes and individuals should take advantage of these legal avenues instead of sinking to the illegal methods which will be sure to cost them. Winnipeg